April 24 (Bloomberg) -- Citigroup Inc. shareholders, who
rejected the bank’s 2011 compensation plan, voted in favor of
the latest round of payouts after the lender said it overhauled
rewards for top executives.

The 2012 plan, which includes an $11.5 million package for
new Chief Executive Officer Michael Corbat, received more than
90 percent of votes cast in the non-binding tally, Secretary
Rohan Weerasinghe said at the annual meeting in New York.

The approval is a success for Corbat and Chairman Michael
O’Neill, who said in February that the bank had changed how it
paid top executives so that rewards would be tied to
performance. Shareholders rejected the previous plan last April
amid criticism that it allowed former CEO Vikram Pandit to
collect millions of dollars too easily. The board ousted Pandit
six months later and replaced him with Corbat.

“The company has taken significant, positive strides” to
remedy concerns about the gap between pay and performance,
shareholder advisory firm Glass Lewis & Co. said in a report
prepared for the meeting. “What a difference a year makes.”

Corbat, 52, and O’Neill, 66, presided over their first
annual meeting together since taking the New York-based bank’s
most senior positions last year. O’Neill, a director since 2009,
replaced Richard Parsons as chairman after the 2012 annual
meeting.

The CEO and chairman have embarked on an overhaul of
Citigroup’s operations, announcing plans to cut 11,000 jobs,
shut branches, pull back from certain markets and exit more if
results don’t improve.

Venting Anger

The meeting was attended by about 150 shareholders.
Investors have used the gathering in previous years as an
opportunity to vent anger as Citigroup shares tumbled amid
bailouts and multibillion-dollar losses tied to subprime
mortgages. While the stock has outpaced other U.S. lenders since
last year, it’s still down 84 percent since the end of 2007.

“We are by no means satisfied,” O’Neill said in response
to a question from Vincent Russo, a shareholder who said the
stock hadn’t performed well enough since a reverse split in May
2011. The split converted every 10 common shares into one new
common share.

Citigroup has advanced about 6.7 percent since the reverse
split, and are up 19 percent this year, after a 50 percent
increase in 2012. They dropped 44 percent in 2011.

Boosting Value

The shares advanced 1.4 percent to $47.12 at 4:15 p.m. in
New York trading. Russell Forenza, who said he lost $1.5 million
on Citigroup shares, said he needed the stock to reach $600 to
break even. He offered to join the board to help boost the stock
price.

“You’ll see some decisions on that board that will get
that stock price back up,” Forenza said.

The vote on compensation was encouraged by Glass Lewis and
ISS Proxy Advisory Services, a unit of MSCI Inc. The bank said
in February that awards will be based on “pre-defined” goals -
- including financial metrics --established at the beginning of
the year, replacing the previous system of rewarding executives
at the discretion of the compensation committee.

Glass Lewis said that there’s still a “disconnect”
between executives’ pay and performance. The firm said it’s
concerned that executives got large cash bonuses for 2012 not
tied to any disclosed financial metrics.

Cash Bonus

Corbat’s 2012 package included a $4.2 million cash bonus.
Manuel Medina-Mora, the head of consumer banking who received
$11 million, including $4.2 million in cash.

Corbat is “decisive and he gets results,” O’Neill said.
“I work closely with Mike, he briefs me on what’s going on, but
I have a clear understanding of who’s running the bank and I’m
not intrusive but I’m interested.”

Corbat told shareholders that he and fellow executives have
turned the bank into a “simpler, smaller, sounder
institution.” The lender manages its risks in a way that would
avert the multibillion-dollar losses that JPMorgan Chase & Co.
suffered in its chief investment office, Corbat said.

“The way we run our institution is different from JPMorgan
in terms of managing risk in this particular instance,” Corbat
said. “That’s not what that money is set aside to do.”

Directors Re-Elected

Shareholders elected 11 of the 12 directors, Weerasinghe
said. Lawrence Ricciardi retired from the board after reaching
the panel’s retirement age of 72, according to a March proxy
filing.

Ricciardi’s retirement brought the number of directors on
the Citigroup board to 11, fewer than the range of 13 to 19 in
the bank’s corporate-governance guidelines.

“The range is intended to be a guideline, not a
requirement,” Shannon Bell, a spokeswoman for the bank, said in
an e-mailed statement. “The board’s intention is to add
qualified directors to the board and will announce these
appointments when they are made.”

The board hasn’t announced a replacement for Ricciardi, who
joined in July 2008, months before Citigroup took a $45 billion
U.S. bailout to avoid collapse. He headed the audit committee
and also was a member of the executive committee. He previously
held executive roles at International Business Machines Corp.,
RJR Nabisco Inc. and American Express Co., according to a
biography in a 2012 Citigroup proxy filing.

Joss, Rodin

Glass Lewis recommended that investors vote to remove
directors Robert Joss and Judith Rodin. Joss, 71, has a
consulting contract with the bank that pays him $350,000 a year
in addition to fees and awards in return for advising on
projects from “time to time,” Citigroup said in a filing.

“We view such relationships as potentially creating
conflicts for directors as they may be forced to weigh their own
interests in relation to shareholder interests when making board
decisions,” Glass Lewis wrote in its report.

Joss, a former Wells Fargo & Co. executive, received
$662,500 in total 2012 compensation, according to the bank’s
most recent proxy filing. The next highest-paid directors were
O’Neill and Anthony Santomero, who each received $375,000, the
filing shows.

Shareholders also should remove Rodin, 68, from the board
because she “failed to adequately oversee the company’s risk
controls” during the three years through 2009 when Citigroup’s
share price tumbled, Glass Lewis said.